Firstly, it's a bad example. He asked permission, and he paid royalties.

Secondly, I'm not saying anyone should be sued. I'm simply saying, repeatedly, that it's up to the courts to decide on a case by case basis, and whatever the decision is in this case, it doesn't affect other parodies. I really don't understand why anyone should be upset or worried about some imagined knock-on effect. The law hasn't changed. Some win these cases, some lose.

But it does matter. The key thing here is that the law is designed to protect both intellectual property AND free speech rights, and in general it does a good job at it. So any individual lawsuit, like this one, shouldn't be condemned for a precedent reason, it should be judged on its own merits. It doesn't in itself damage future scenarios.

The Garbage Pail Kids lawsuit was for trademark violation, not copyright, which means different laws applies. Parody didn't enter into it, it was a straight commercial issue. Uri Geller lost in California, I believe, and the decision made by Nintendo was to avoid possibly losing in other countries. It may or may not have been a "good" decision, but it didn't set precedent.

Comedians doing a parody would probably be safe under fair use, even if it was commercial. Comedy skits parodying movies would definitely be safe because they're transformative - it's a totally different kind of parody. So yes, there are legitimate cases where you can make money off it.

If the courts decide it was sufficiently transformative, then Black Eyes Peas will lose. Leave it to them to decide.

If the toy company is a commercial operation, then it probably isn't (and shouldn't be) covered by parody "fair use". They're using someone else's intellectual property to make a profit, so they should pay to use it. The judgement, whatever it is, wouldn't be setting a precedent, each case should be judged on its own merits.